Retail index on downward trend

PUBLISHED : Friday, 12 June, 1998, 12:00am
UPDATED : Friday, 12 June, 1998, 12:00am

The mainland's leading inflation indicator, the retail price index (RPI), continued its downward trend last month, showing domestic demand still remained sluggish, despite tentative signs of recovery in industrial output and fixed-asset investment.

RPI in May fell 2.7 per cent year on year, compared to a year-on-year fall of 2.1 per cent in April, Xinhua news agency reported yesterday, citing figures from the State Statistical Bureau.

Last month's consumer price index, which includes more volatile service prices, was down 1 per cent year on year.

In the first five months, RPI dropped a year-on-year 1.9 per cent, down from a year-on-year fall of 1.7 per cent in the first four months of the year.

Between January and May, consumer prices fell 0.1 per cent, compared to a gain of 0.1 per cent in the first four months.

Last year, RPI was up 0.8 per cent while consumer price inflation rose 2.8 per cent.

RPI slipped into negative territory in October and has since moved downwards because of sluggish demand and falling food prices.

Food prices accounted for about 50 per cent of the mainland's RPI.

Economists said falling prices had exerted great deflationary pressure on the mainland economy, forcing firms to cut production and leading to huge stockpiles of unsold products in many industries.

Beijing has said it will count on efforts to stimulate domestic demand to help boost economic growth to a target 8 per cent this year.

It has worked out measures to encourage private home ownership and pump more money into infrastructure projects.

Official figures showed these measures had started to take effect, with May industrial output and broad money supply figures showing signs of recovery.